Shell share price forms a triangle as focus shifts to July 27

Shell (LON: SHEL) share price is having a difficult year as investors watch the performance of crude oil and natural gas prices. The stock was trading at 2,320p on Monday, a few points below last week’s high of 2,370p. In all, the stock has risen by about 4% this year while the S&P 500 and Nasdaq 100 indices have jumped by double digits. The Vanguard Energy ETF has dropped by ~1% this year.

Big changes at Shell

European oil and gas companies have underperformed their American peers like Occidental, Marathon, Exxon, and Chevron for a long time. A likely reason for this is that European companies like BP and Shell have pivoted to renewable energy at a breakneck speed.

Recently, however, these companies are changing tact. Earlier this year, BP announced that it was cutting its green shift as demand for fossil fuels jumped. Total and Shell have also announced plans to reduce their focus on green energy.

The most recent energy news is that Shell is exploring selling its green business. According to Bloomberg, the company is exploring options for a renewable business, which it has invested heavily in the past few years. Shell has already selected advisors for the transaction.

It is unclear whether this sale process will continue and the amount the company will fetch. Some analysts believe that the renewable businesses will fetch about $4 billion.

There are other alternatives. For example, investor Dan Loeb has asked the company to create a separate company made up of its natural gas and renewable business. The remaining company will be fully focused on fossil fuels.

Shell share price is also reacting to the price action of crude oil and natural gas. Crude oil and natural gas prices have been under pressure lately as concerns about Chinese economic growth continued. As I wrote here, the most recent data showed that China’s economy slowed down in the second quarter.

Shell share price forecast

Shell chart by TradingView

The daily chart shows that the Shell stock price has moved sideways in the past few months. It has moved slightly below the 50-day and 100-day exponential moving averages (EMA). Most importantly, the stock has formed a symmetrical triangle pattern shown in blue.

The triangle pattern is nearing its confluence level. In most periods, this pattern usually leads to a bullish or bearish breakout. This breakout will likely happen if Shell confirms its renewable business exit. 

Another catalyst for the stock will happen on July 27th when the company will publish its financial results. Analysts expect the company’s revenue will come in at $79.2 billion while the earnings per share rose to $1.04.